The leader of the banned Basque separatist party Batasuna has called for peaceful dialogue between all sides to end decades of armed conflict in the Spanish region.

But Arnaldo Otegi stopped short of launching an anticipated appeal for the militant group Eta to end its terror campaign.

With wry smiles, many Spaniards shrugged their shoulders.

They had hoped for a miracle - the announcement of a definitive end to Basque separatist violence by the militants' political mouthpiece, Batasuna.

But few had really believed it would happen.

"A group of us were discussing this, this morning and we decided to lay bets on what Batasuna would say," said Alejandro, a student in Madrid, "but out of eight of us not one person thought they would explicitly condemn violence.

"How can they? Their party has always depended on terrorists."

"All this makes me so sad," said Marian, an interior designer from Bilbao, the regional capital of the Basque country.

"It's another wasted opportunity. Batasuna promised a 'new way out' of the Basque conflict but what they've announced today is meaningless and it's old hat."

Our armed struggle doesn't work.. because of the repression the enemy wages us

Jailed Eta senior member

Political activists organised a rally of 15,000 people on Sunday in the Basque country's scenic San Sebastian on behalf of Batasuna. The outlawed pro-independence party is no longer allowed to hold demonstrations itself.

Since it never explicitly condemned Basque separatist violence, the party was made illegal 20 months ago by Spain's Supreme Court.

But Batasuna's close ties to Eta meant there had been considerable anticipation across Spain about its widely publicised declaration.

A crackdown begun by the former conservative Popular Party government and continued by the Socialists has debilitated Eta.

French and Spanish police have arrested more than 100 Eta suspects on both sides of the border so far this year.

Most of the group's leaders have been detained and its caches of weapons and explosives seized.

Six of its imprisoned senior members recently urged Eta to abandon violence.

"Our armed struggle doesn't work.. because of the repression the enemy wages us," said the letter, leaked earlier this month to the Spanish press.

The six signatories, who include Francisco Magical Garmendia, Eta's leader in the late 1980s, one of group's bloodiest periods, recommended Eta should exchange violence for politics as a means of achieving its decades-old goal of a sovereign Basque nation in northern Spain.

It was hoped Mr Otegi would echo the men's message at Sunday's rally in San Sebastian.

He had been urged to do so by other more moderate Basque nationalist political organisations, as a means to finally bring peace to the Basque country.

This is the last train Batasuna can get on politically

Senior Basque government figure

And there were other, less altruistic reasons why Batasuna may have finally chosen to openly condemn Eta violence - to be accepted back into the political arena.

The Basque Parliament is to hold elections in the upcoming months.

As long as it is legally outlawed, Batasuna candidates are barred from standing.

"This is the last train Batasuna can get on politically," a senior figure in the autonomous Basque government told me before the San Sebastian rally.

"This attempt at a peace strategy is its final hope. If Batasuna chooses democratic means and rejects violence maybe it can become a legal political party again," said the source who prefers not to be identified.

Eta, a Basque-language acronym that stands for Basque Homeland and Freedom, has been blamed for more than 800 deaths since 1968.

It's more difficult to make peace sometimes than to make war

Batasuna leader Arnaldo Otegi

But in the end Mr Otegi's declaration omitted any talk, never mind condemnation, of Eta's militant activities.

In a speech roundly dismissed and condemned by Spain's mainstream political parties as "insufficient" and "not far-reaching enough", Mr Otegi declared that a referendum on the future of the Basque country must be held before peace can come to the region.

In a seven-point plan he said Batasuna would do everything possible to ensure the referendum on more Basque autonomy was held in a "peaceful and a democratic manner".

Eta attacked two hotels in 2003

Basque sovereignty, though not necessarily additional political autonomy, has been ruled out as an option by Spain's main political parties.

The closest Mr Otegi came to condemning violence was when he said Batasuna would "take the conflict away from the streets to a negotiation and dialogue table".

"It's more difficult to make peace sometimes than to make war," he said
"To make peace means ... even going so far in the end as to seek the involvement of our enemies. We know it well, we are prepared, we accept it, we have a firm commitment to do it."

'Quiet period'

But even that statement was met by political cynicism.
"Eta is weaker now than at any point ever in its history," said Angel Acebes, the Secretary General of the conservative Popular Party.

"And since Batasuna and Eta are synonymous, Batasuna too is in terrible shape. After all the recent arrests and confiscation of weapons, they need time to regroup and rearm. They will say anything at all in order to give themselves enough time to do that."

Alfredo Perez Rubalcaba, a spokesman for the Socialist government said: "To talk in democracy, only the voices of those who talk can be heard. Not the noise of the guns or the blast of the explosions and not even the whispering of those who make threats. Only the voices of those who talk."

Eta has in the past announced a dozen ceasefires, all of which it has broken.
The longest ceasefire was held for 15 months between 1998 and 1999.

Eta carried out its last attack on Saturday, but no-one has been killed in an Eta attack in more than 17 months.

This has been the quietest period in the group's history, barring truces, since the early 1970s.